Fixed Costs – We gotta get out of this place!!
On 1 October 2023, the fixed costs regime will be expanded to cover claims worth over £25,000.00 and up to £100,000.00. If you are one of the many firms of Solicitors dealing with cases in this bracket read on!
On 1 October 2023, the fixed costs regime will be expanded to cover claims worth over £25,000.00 and up to £100,000.00, although there are some claims specifically excluded from fixed costs, as set out below.
(a) One which includes a claim for clinical negligence, unless –
- the claim is one which would normally be allocated to the intermediate track and
- both breach of duty and causation have been admitted;
(b) a claim for damages in relation to harm, abuse or neglect of or by children or vulnerable adults;
(c) a claim is one the court could order to be tried by jury if satisfied that there is an issue a matter set out in section 66(3) of the County Courts Act 1984(a) or section 69(1) of the Senior Courts Act 1981(b); or
(d) a claim against the police which includes a claim for –
- an intentional or reckless tort; or
- relief or a remedy in relation to a breach of the Human Rights Act 1998.
Housing claims also excluded from the fixed costs regime until at least October 2025.
Assuming your claim is not excluded under any of the above, a new “Intermediate Track” has been introduced which will become the usual track to deal with the Claims within this bracket of damages. Upon allocation the Court will also be required to assign the claim to one of four bands or levels based upon the complexity of the claim before it, with band 1 being the least complex and band 4 the most complex. The Court will require attempts to have been made between the parties to agree directions, including the band/level for the claim, although the Court may decide upon a different band/level if it considers it more appropriate to do so.
The bands, as defined in April 2023, are:
Complexity band 1
Any claim where –
(a) only one issue is in dispute; and
(b) the trail is not expected to last longer than one day, including –
- personal injury claims where liability or quantum is in dispute;
- non-personal injury road traffic claims; and
- defended debt claims.
Complexity band 2
Any less complex claim where more than one issue is in dispute, including personal injury accident claims where liability and quantum are in dispute.
Complexity band 3
Any more complex claim where more than one issue is in dispute, but which is unsuitable for assignment to complexity band 2, including noise induced hearing loss and other employer’s liability disease claims.
Complexity band 4
Any claim which would normally be allocated to the intermediate track, but which is unsuitable for assignment to complexity bands 1 to 3, including any personal injury claim where there are serious issues of fact or law.
The bands are then subdivided into 15 distinct stages with different levels of fixed costs being awarded depending on the stage the claim reaches and whether a specialist legal representative/s are instructed.
Avoiding the Intermediate Track altogether
How can you avoid/escape the Intermediate Track?
Value – if the claim is valued at over £100,000.00, it is not suitable for the Intermediate Track. This may seem obvious but please bear in mind that it is the total value of the claim that decides the allocation. If, for example, contributory negligence was raised and this would result in the damages awarded being less than £100,000.00, the claim should still be allocated to the Multi-Track based on the full value of the claim.
You must be realistic in the valuation of the claim. It is unlikely that the courts will look favourably on cases being valued at levels just above £100,000.00 to take them out of the fixed costs regime. We can be certain that, in cases where the value has been pleaded at a figure only slightly more than £100,00.00, the Defendant is going to make submissions that the claim value will be less than £100,000.00 and that the appropriate track for allocation would be the Intermediate Track. You must ensure that you have sufficient evidence to present to the court demonstrating exactly how the valuation of the claim was calculated at the level pleaded.
Complexity – if a claim is valued between £25,000.00 and £100,000.00 but it is exceptionally complex the Court has the discretion to allocate the case to the Multi-Track and by doing so would take the claim out of fixed costs regime.
To demonstrate that the claim is complex you will need to present to the court with supporting evidence to that effect. It has been indicated the top band of complexity in the Intermediate Track, Band 4, will be able to deal with “any personal injury claim where there are serious issues of fact or law” and it therefore seems likely that in injury claims the complexity aspect will need to come from the unusual nature of the injuries, any unusual treatment undergone and/or the long term care required – which may alter over time depending on the Claimant’s needs. You will need to be able to demonstrate to the court exactly what it is about this case which takes it outside of what you would consider normal for the type of claim.
Number of Experts – the Intermediate Track has been based on the understanding that oral expert evidence at trial is limited to two expert witnesses per party. If you can convince the court your case requires three or more experts, this should automatically result in Multi-Track allocation.
The issues of complexity and the number of experts required are intricately linked. It can be anticipated that the more complex the case being presented, the more likely it is you will require more input from expert witnesses to support the claim. When instructing an expert, you may wish to include some questions regarding whether they consider there are aspects of the client’s injuries and/or treatment/future care etc that they are unable to advise on and whether they would recommend an expert in another field should be requested to provide an opinion. It will clearly be much easier to persuade a court that further expert witnesses are required if you are able to demonstrate a trail where expert A recommended the opinion of the expert B should be sought, expert B recommended input from expert C and so on. If you get to expert C, you will be demonstrating you require more than two expert witnesses and therefore the claim should leave the Intermediate Track.
Give careful consideration to the various aspects of the claim. It may be that there are enough different issues that need addressing that means experts in more than two different areas are required. If you can demonstrate this to the court, you will be able to escape fixed costs. However, you should also ensure that you keep the costs likely to be incurred proportionate to the claim being pursued. The court may consider it disproportionate for multiple experts to be involved in a claim with a low value.
Length of Trial – the Intermediate Track does not apply to any case where the length of the trial will exceed 3 days. If you anticipate your claim will take 4 or mare days for trial this should again mean that the claim is allocated automatically to the Multi-Track.
It is considered likely that the length of trial will be a common point of dispute between the parties. Where a Claimant indicates a 4- or 5-day trial is appropriate, it will not be unusual for the Defendant to indicate that matter could be dealt with in 3 days to keep the claim in the Intermediate Track. Again, you must be realistic when it comes to estimating the length of the trial. If the matter is not complex and you will require no more than 2 expert witnesses, what is involved that means you will need to exceed 3 days of trial? You will have to be able to provide the court will good reasons to show 3 days is insufficient if you are going to escape fixed costs.
Getting the best result from the Intermediate Track
How do you maximise your costs recovery if you are stuck with the Intermediate Track?
To maximise your costs, you will need to get the claim allocated to the highest band of complexity possible. As previously indicated, there are 4 bands of complexity, with 1 being the lowest and 4 the highest. The rules require that you attempt to agree directions with your opponent, including the track the claim is to be allocated to and, in the case of both the Fast and Intermediate Tracks, the band it is considered the claim will fall within.
At the moment, the information regarding the bands of complexity is limited but the indications so far are that many debt claims or quantum only personal injury claims will be suitable for Band 1. Band 4 will be for the most complex cases, such as a business dispute or an employers’ liability disease claim where there are serious issues of fact/law, and the trial is likely to last three days. Bands 2 and 3 will be the normal bands for intermediate track cases, with the more straightforward cases going into Band 2 and the more complex cases going into Band 3.
The complexity Band the claim is placed within will make a significant difference to your costs recovery.
Examples
Example 1 – In a claim where the matter is settled within Stage 1 (from pre-issue up to and including the date of service of the defence) the fixed costs recoverable are:
Band 1 – £1,600.00 + an amount equivalent to 3% of the damages.
Band 2 – £5,000.00 + an amount equivalent to 6% of the damages.
Band 3 – £6,400.00 + an amount equivalent to 6% of the damages.
Band 4 – £9,300.00 + an amount equivalent to 8% of the damages.
Example 2 – In a claim where the matter is settled at Stage 8 (from the end of Stage 6 up to the date of the trial) the fixed costs recoverable are:
Band 1 – £6,600.00 + an amount equivalent to 15% of the damages, less £580 if that party did not prepare the trial bundle.
Band 2 – £17,000.00 + an amount equivalent to 20% of the damages, less £870 if that party did not prepare the trial bundle.
Band 3 – £19,000.00 + an amount equivalent to 20% of the damages, less £1,120 if that party did not prepare the trial bundle.
Band 4 – £29,000.00 + an amount equivalent to 22% of the damages, less £1,400 if that party did not prepare the trial bundle.
It is therefore imperative that the highest possible Band allocation is obtained. To achieve this your default settings should be that you will need two expert witnesses and a 3-day trial to deal with the claim.
You will need to carefully consider the expert evidence required to support the claim. Is there a way that you can reasonably get two different experts involved? Look carefully at all evidence to be presented for the court to consider. Can you increase the witness evidence being presented? How much disclosure is required? The combination of all these aspects will help determine the length of trial you will require for the claim to be heard and a matter requiring a 3-day trial will be assumed to be more complex than a claim requiring a 1-day or 2-day trial.
The value of the claim must also be taken into consideration. The court is more likely to consider that it would be reasonable to require 2 experts and a 3-day trial on a matter valued at £95,000 than one valued at £30,000. The issue of proportionality will need to be an important part of the process in deciding what submissions to put forward on the amount of work required.
It is not mandatory to agree directions with the Defendant, but both parties may come in for criticism from the court if their failure, or the failure of one of the parties, is considered unreasonable. You will need to be realistic in the directions put forward. It may be worth reviewing concluded cases of similar value to determine what length of trial took place, the work done, and the number of experts involved in them to influence your decisions. In the long term it will not benefit you if most of your proceedings are issued in the same court and you get a reputation there for always requesting the most complex of the bands in the Intermediate Track. Each case needs to be judged on its own merits and reasonable decisions taken to determine the appropriate complexity band to request in the directions.
It will take some time following the implementation of the rules for cases to go through the Intermediate Track process and to reach their conclusion. We would suggest that you keep a record of all cases dealt with on the Intermediate Track and the band of complexity that each is assigned to. You may also wish to keep a record of the number of experts and the number of days trial allowed. Over a period those records should provide you with assistance in making decisions in respect of any new claims likely to be allocated to the Intermediate Track.
You will have gathered from this article that PIC consider there will be numerous battles between parties as a result of the new fixed costs regime. If you have any queries or require any assistance with the same, please do not hesitate to get in touch with us.
Mike Fitsell, Costs Lawyer
31.08.2023